Former American Airlines chief Robert Crandall is back in the airline business, advising and funding a new Internet start-up that will let US frequent fliers redeem their miles for discounts on consumer goods.
Dubbed MilePoint, the venture is expected to be launched by the end of October. So far, six US carriers are participating and own stakes in the company: America West; Continental Airlines; Delta Air Lines; Northwest Airlines; Trans World Airlines; and US Airways. Hilton Hotels is also taking part in the programme.
Travellers who belong to the loyalty programmes of these airlines and Hilton will be able, through MilePoint, to redeem miles for discounts on merchandise from Amazon.com and from the 130 merchants on the SkyMall web site. The carriers will pay MilePoint a fee for each transaction, as will the retailers. MilePoint is the brainchild of Mark Lacek, a one-time Northwest executive who helped run its frequent flier programme. Other individuals on the company's board of advisors - which is chaired by Crandall - include Bob Coggin, former executive vice-president of marketing of Delta, AB "Sky" Magary, former president of Shuttle by United, and Randy Petersen, a Colorado-based loyalty programme expert.
Crandall, a minority investor in MilePoint, who, during his tenure at American launched what later became the industry-wide concept of frequent flier programmes, says MilePoint makes sense for travel suppliers, retailers and travellers. "The fee we charge airlines for liquidating miles is much less than it would cost them to actually deliver the seats. The retailers are paying us a whole lot less to find qualified customers than they would have to pay to advertise to them. And we are turning miles into dollars - the world's full of people who desire different things," says Crandall.
He anticipates the discount on merchandise bought through MilePoint will average 10%. MilePoint eventually plans to offer a similar programme in regional US markets with local merchants, and also be offered outside of the USA. Crandall estimates MilePoint will become profitable by the end of 2001.
Asked if he missed his position at American, he replied: "I had a terrific time running American, but I had grown very weary of the union conflicts and of the uninformed, politically inspired commentary of the folks in Washington. I reached a point where I preferred being retired to doing that." Besides working on MilePoint, he sits on the boards of five corporations, including American Express and Halliburton.
Source: Airline Business
